The Continued Relevance of Performance Management: A Q&A with Levent Arabaci, CHRO, Hitachi

There have been countless articles speculating that aspects of performance management are quickly becoming a thing of the past. Hitachi’s CHRO, Levent Arabaci does not fully agree with this sentiment. In this Q&A,Levent gives his thoughts on why performance management will continue to be necessary for continued organizational success. He also weighs in on workforce culture and measuring HR’s contributions during business growth.

What are your thoughts on the current state of performance management?

LA: Recently, there has been a lot of buzz around performance management and its effectiveness. However, I firmly believe that performance management is a critical tool to achieve accountability as well as desired results and behaviors across the company. It is not the tool itself but the managers that make this tool successful in developing people. If set right, performance management can create an accountability environment that shows what people have achieved as well as how they got there. Both of these components are critically important. What employees have achieved is measured through SMART goals. The ways that employees got there are measured through key competencies (behaviors). Competencies are important to not only measure someone’s journey (How) on the way to achieving goals but to also shift company cultures towards desired behaviors and core values. We have a long way to go to ensure that performance management is properly set up in today’s environment (in every company) and utilized as a developmental tool to unleash peoples’ full potential. Creating an accountability culture is important to deliver results. Creating a development culture is even more important to reward top performers. Performance management plays a critical role to achieve these objectives.

Where do you envision performance management in 2020?

LA: I envision performance management as a tool that is embraced by business leaders to achieve results and is utilized not only once a year but as part of an ongoing feedback mechanism to develop employees and managers. This will require a combination of the right system and the right ingredients to make performance management a successful business tool. Performance management should be real time, simple and effective. There are currently some solutions that are moving toward this direction however, HR and business leaders need to remain vigilant and keep up with this trend. It will take a mind shift around the way we think about performance management and the way we design and deliver it in the future.

What do you feel is the greatest benefit of transforming an organization’s culture and what cultural characteristics do you find to be the most crucial?

LA: Transforming an organization’s culture is an extremely challenging undertaking. However, in some cases it must take place in order to ensure the survival of the company. There are multiple conditions, either external or internal, that contribute to the decision to undertake this massive ordeal. In any case, it has to be handled with care and the entire executive team has to be actively involved in order to achieve success of a massive shift. However, companies who achieve this shift will rejuvenate themselves and continue their successful journey onward. As Heraclitus, a Greek Philosopher figured out centuries ago, "change is the only constant in life." Transforming an organizational culture to adapt to current or future changes is almost unavoidable and will result in renewed focus and energy.

I personally value companies and leaders that possess the following characteristics:

•Communicating and Executing a Vision (Not any vision but something that motivates, excites, and potentially will contribute to the society, world and universe. Sky is the FLOOR type of Vision)

•Drive for results. Delivering results, executing a vision and making things reality is important. Companies that deliver results will have a winning culture and they will hold themselves accountable.

•Building a winning TEAM is another important characteristic when it comes to company culture. It is all about talent. Having the right people in the right positions is important. People who have objective filters, challenge the status quo, take risks and have sense of accountability are a recipe for success. It is all about People.

Are there specific HR contributions to business growth that are difficult to establish metrics and KPI’s for?

LA: First of all, every metric and every KPI has to be global. If you are not able to provide a global KPI to your business that means that you do not even have basics in place and you have to be busy building your foundation. Once the foundation is in place and you can provide any metrics without BOUNDARIES then there are many different KPIs that can be used to guide the business. However, it is not the KPI but HR’s ability to analyze and present to the business around these KPIs that matter. We in HR must be best at analyzing the data and providing insight to the business. Most importantly, it is no longer just providing the business with KPIs that represent a reactive and after the fact view, but HR must provide predictive analytics. Only then do we add value to the business that has never been done before. Predictive analytics is the way of the future and HR’s lifeline. We must deliver on this important capability.

Join Levent on opening day for his session: Integrating HR Systems and Building a Global Talent Pool to Boost Business Results:a Multi-Year Plan to Align HR Strategies and Leverage HR Efficiency. Download the Agenda for more information.

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